The term “early adopters” was not coined with millennials in mind, but that group of the population has become the textbook definition of the term. This is especially true in the area of technical innovation. For a generation that has never been exposed to a world without computers, new technologies are approached without fear and with an innate understanding of how to use them, which is a direct result of this lifelong exposure. Millennials have not only learned to master a connected world, they have come to expect connectivity in most areas of their life. One area where this is especially true, and one where this group’s reliance on and their expectancy of connectivity is a concern for established business is in the area of banking.
Millennials love financial technology (Fintech). The reasons are fairly obvious.
Millennials embrace an unrestricted lifestyle.
Unlike previous generations, millennials are prone to avoid products and services which tie them down and restrict decisions. For many millennials the most long-term commitment they have is a student loan. Most are avoiding traditional long-term commitments like home ownership and car ownership. They are more prone to use car-share companies than prior generations for example. The concept of “having access” takes priority. This applies to banking services, utilities, and many other services.
Peer-to-peer and collaborative networks are very popular.
“Sharing” is an almost ingrained part of the digital experience. Studies show that they are more generous and less ownership focused than previous generations. Fintechs have a reputation for benefiting the collective users and this approach is welcomed by millennials. Some predict that business approach will eventually replace the old business models.
The global financial crisis had a sobering impact.
The global financial crisis scared millennials almost of much as the great depression scared their great-grandparents. Not only did have a very negative on the job market just as many were entering the workplace, it highlighted the failures and shortcomings of the large banks and financial institutions. Banking and insurance have very negative ratings with millennials, a perception that is likely to last a lifetime. Fintechs provide an alternative to the business-as-usual institutions.
Technology fits the millennial mind-set
Face-to-face interaction in business and even some social situations are not the chosen method of communication for millennials. Having grown up with technology means that texting is more common than making a phone call and that online shopping is more common than going to a shop. It only stands to reason that financial services, which offer a familiar digital presence, would be preferred.
On a wide range of levels, Fintech is perfectly suited for millennials; perhaps due to the fact a majority of those behind Fintech start-ups are millennials themselves. Banks and insurance companies are well aware of this growing trend and the threat it proposes to their business model. Jamie Dimon, head of JPMorgan Chase recently told company shareholders that “Silicon Valley is coming” and “hundreds of start-ups” providing alternatives to traditional banking. There is little doubt that millennials will change the face of banking and financial services forever. As most technology seems to trickle out and achieve mass acceptance, millennials love of Fintech will also benefit a far larger segment of the population.